Education IRA's offer families the opportunity to save money for educational expenses. Contributions ($500 maximum annual contribution) grow tax-free until distributed and the child will not owe tax on any withdrawal if the money is used to pay qualified higher education expenses at an eligible institution. Individuals contributing to Education IRA's must meet income requirements.

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Students and parents who are repaying education loans can take this advantage if they meet income requirements. The deduction is available only for the interest payments made during the first 60 months in which interest payments are required on the loan.

New York State residents will be allowed an itemized deduction for the full amount of qualified college tuition expenses paid, up to $10,000 per taxpayer each year. In lieu of the itemized deduction, taxpayers who do not itemize their deductions may choose to receive an income tax credit equal to four percent of their college tuition payments, up to $400 per year by 2004 tax year. The deduction and credit will be phased in over four years. For 2001 tax year the maximum credit will be $100. For more information visit New York State Higher Education web site at www.hesc.com or for a copy of IT-272 form and instructions visit www.tax.state.ny.us